Rick Holmes: Poverty, inequality and opportunity

I propose we celebrate the 50th anniversary of the War on Poverty by vowing to never again use the phrase “war on poverty.”

Bad metaphors lead to bad policy, and “war on poverty” is one bad metaphor. Now that we’ve launched a new debate about income in America, it helps to understand the pitfalls of the terms we use.

First, the war on poverty was never a war, and certainly not the “unconditional war” Lyndon Johnson declared in 1964. Poverty is a condition, not an enemy nation. When you declare war on something that can’t surrender – a bad habit among American presidents – you invite dumb comments like “we wasted billions of dollars fighting a war on poverty and poverty won.”

Besides, poverty isn’t really the problem. It’s the result of a long list of problems: lack of jobs, low pay, lousy education, sickness, disabilities, single motherhood, and, one of the major determinants of poverty, having parents and grandparents who were poor.

Johnson’s generation didn’t send the army to fight poverty. It established government programs aimed at its component problems: jobs training, public housing, targeted economic development, prenatal care. Some worked, some failed and many were abandoned by Johnson’s Republican successors.

More successfully, Johnson’s generation put a floor under the nation’s poor. Thanks to food stamps, being poor in America didn’t mean the kids had to go to bed hungry. Thanks to Medicaid, sick people could go to the hospital even if they couldn’t afford the bills. Thanks to unemployment insurance, losing your job lost some of its sting.

Those billions of dollars spent in 50 years weren’t wasted because some Americans are still poor. They helped millions of families survive temporary setbacks and permanent disadvantages.

But there were some unintended political consequences to Johnson’s crusade to alleviate poverty. Showering benefits on the poor created resentment among those a rung or two up the ladder, an emotion Republicans like Richard Nixon and Ronald Reagan were happy to exploit.

Democrats, in turn, were slow to recognize what was happening to the middle class. By the ‘80s, middle-income jobs were disappearing, costs were rising and wages were stagnant. Families coped by sending both parents into the workplace, borrowing against the equity in their homes and maxing out their credit cards. The housing crash and the great recession made all those things worse, and now we have a new cause: income inequality.

“Income inequality” sounds straightforward, and no one’s declared war on it, so far at least. But it has other problems. For some, it implies that all income must be equal, which makes people rush to protect their wallets. Pure equality would undermine the incentive to get ahead, which is un-American. It reeks of redistribution of wealth, which people assume is OK if the market does it, but not if the government does it.

Page 2 of 3 - But income inequality isn’t a matter of either/or, but of how much. How much inequality is good for Americans’ economic well-being, and how much hurts it?

Economists measure inequality through a formula called the Gini coefficient, developed a century ago by Italian statistician Corrado Gini. Put on a timeline, it shows inequality rising in the early part of the 20th century in the U.S., peaking around 1929. It drops off sharply through the Great Depression and stays low through the ‘50s and ‘60s, when America’s middle class flourished. Inequality started rising again in the ‘70s, picked up steam in the ‘80s and reached 1929 levels just as – by no coincidence, some economists say – the economy crashed again in 2008.

It’s not just instability that comes with high levels of inequality. In “The Spirit Level,” researchers Kate Pickett and Richard Wilkinson compared data from dozens of countries, showing how inequality correlates with a raft of social ills: poor health, mental illness, violence, community apathy.

Inequality also correlates with lower economic opportunity, which is a problem conservatives are more willing to talk about. In one of the Republican responses to this week’s State of the Union address, Rep. Cathy McMorris Rogers cited “opportunity inequality.”

“The uncomfortable truth is that there are now a number of other countries with as much or more opportunity than ours,” GOP Sen. Marco Rubio conceded this month. “More people in Canada go on to surpass the income of their parents than in the United States.”

As this debate progresses, there will be a tendency for Republicans to stress economic opportunity, the Democrats to stress income inequality, and for freely mixing the two themes. Gov. Deval Patrick, in his “state of the commonwealth” speech this week, spoke of “rebuilding the ladder of opportunity.”

Beyond the rhetoric, we need a good discussion of what should be done about these gaps. Since education has always been an important rung on the ladder of opportunity, that’s one bipartisan place to start. Simply taking from the rich and giving it to the poor will be a tougher sell politically, but if we’re looking for resources to build that ladder, the overflowing accounts of the 1 percent are a place to start.

We also have to recognize that while it’s essential that every American have the opportunity to get rich, everyone can’t fit at the top of the ladder. We need to shore up that floor under the poor and restore economic security for the middle class. That’s where goals like a living wage, affordable health care and secure retirement come in.

We’ll get closer to solving these problems if leaders avoid the rhetoric of class warfare, however tempting and appropriate it may feel, and focus on specific programs to address the real problems of American families. And this time, let’s not declare war on our problems; let’s fix them.